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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






2. Total product divided by labor employed. APL = TPL/L






3. The difference between total revenue and total explicit costs






4. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






5. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






6. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






7. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






8. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






9. Ed < 1






10. The mechanism for combining production resources - with existing technology - into finished goods and services






11. Models where firms are competitive rivals seeking to gain at the expense of their rivals






12. The most desirable alternative given up as the result of a decision






13. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






14. Ed > 1 - meaning consumers are price sensitive






15. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






16. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






17. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






18. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






19. Ed = (%dQd)/(%dP). Ignore negative sign






20. Two goods are consumer substitutes if they provide essentially the same utility to consumers






21. Demand for a resource like labor is derived from the demand for the goods produced by the resource






22. Exists if a producer can produce a good at lower opportunity cost than all other producers






23. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






24. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






25. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






26. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






27. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






28. Entry of new firms shifts the cost curves for all firms upward






29. TR = P * Qd






30. Costs that change with the level of output. If output is zero - so are TVCs.






31. The rational decision maker chooses an action if MB = MC






32. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






33. All firms maximize profit by producing where MR = MC






34. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






35. Exists at the point where the quantity supplied equals the quantity demanded






36. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






37. Exists if a producer can produce more of a good than all other producers






38. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






39. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






40. The additional benefit received from the consumption of the next unit of a good or service






41. The practice of selling essentially the same good to different groups of consumers at different prices






42. The ability to set the price above the perfectly competitive level






43. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good






44. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






45. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






46. Ei > 1






47. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






48. MUx / Px = MUy/Py or MUx/MUy = Px/Py






49. The lost net benefit to society caused by a movement away from the competitive market equilibrium






50. The additional cost incurred from the consumption of the next unit of a good or a service